Calculate the payback period (PP) for the cash flows provided in the t

Calculate the payback period (PP) for the cash flows provided in the table below. Note: The negative cash flow for year 0 is the initial investment for the project.
Year Cash Flow
0 -$131,000
1 $187,000
2 $24,000
3 $10,000

A) 0.70 years
B) 1 year
C) 1.25 years
D) 2.75 years

ANSWER

A
Explanation: A) PP = $131,000/$187,000 = 0.70 years.